Endogenous retroviruses (ERVs) arise from retroviruses chromosomally integrated in the host germline. The pervasive infiltration of ERVs in genomes represents an important source of genetic variation across and within species. ERVs are highly abundant in vertebrate genomes, accounting for 8% of the human DNA. However, surprisingly little is known about the functional impact of this important class of mobile elements on the physiology and evolution of their hosts. ERVs can cause specific pathologies in animals, including cancer, but their association with human disease remains controversial, despite half a century of investigation. Even less understood are the potential beneficial functions ERVs confer on their host cells. This project is designed to yield transformative insights into the biological significance of ERVs in evolution and disease. The central and innovative idea of this proposal is that the perpetual genetic conflict between hosts and pathogens has led to the invention and diversification of molecular arsenals, which in turn promote the co-option of endogenous viruses for cellular function in immunity. We hypothesize that prefabricated regulatory and coding activities encoded by ERVs have been repeatedly co-opted during mammalian evolution to enhance immune defense functions. In Aim 1, we will investigate the role of ERVs in the regulatory evolution of a major component of the innate immune system: the interferon response. We will provide direct experimental evidence that a primate- specific ERV has become a critical regulator of the human inflammasome. To obtain a comparative, genome- wide assessment of the role of ERVs in shaping the interferon gene network across mammals, we will identify ERV-driven transcriptomic and chromatin changes induced upon interferon treatment of dermal fibroblasts from human, other primates, and rodents. Experimental manipulations in cell lines, including reporter assays, genome editing, and pathogen infection assays, will be used to validate the immune function of newly discovered ERV-derived cis-regulatory elements and novel interferon-stimulated genes. In Aim 2, we will deploy a novel computational pipeline combining genomic, expression, and evolutionary sequence analysis to produce a comprehensive catalog of ERV-derived envelope genes likely co-opted for cellular function in the human genome. Several envelope proteins expressed in healthy tissues and showing signatures of purifying and/or positive selection will be tested in cell culture assays for their ability to restrict infection of ancient and modern retroviruses. Together the outcomes of this proposal are anticipated to shift the perception of ERVs from inert retroviral fossils to actie contributors to the evolutionary plasticity of vertebrate immune defenses. In addition, our studies are bound to uncover new immunity genes in the human genome, including novel molecules with potentially therapeutic antiviral activities.